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Intelligence, Innovation & Best Practice<br />How organisations are driving growth and profitability<br />Phil Ruthven, Ch...
Topics<br />1.	A New Age Business<br />2.	The Intelligent  Organisation<br />Innovation & Productivity<br />Keys To Succes...
1. A New Age Business<br />
Expectations of a New Age business<br />Profitability and growth<br />A return on shareholder funds after tax of 4 times t...
Australasian Profitability by Cohorts   Return on Shareholder Funds (after tax), Top 1250 businesses    5 years to F2009<b...
ProfitabilityBy Major Industries Return on Shareholder Funds (after tax), Top 1250 businesses   5 years to F2009<br />0.4<...
 Intellectual Property<br />Intellectual property  can best be described as a “cocktail” of: <br /><ul><li>skills, special...
patents, trademarks & brands;
organisational culture, customer relation protocols;
vision, plans and documented achievable strategies.</li></ul>It is the "holy grail" of a enterprise, its core and its most...
Unique Organisational Culture<br />A unique culture is about attracting and keeping <br />good people to your business, an...
2.The Intelligent  Organisation<br />
The Total Environment For Business  <br /> W O R L D<br /> N A T I O N A L    R E S O U R C E S  <br /> C O M M U N I T Y ...
How much do weneed to know about . ..<br />The Influential Environments (4)<br />     1.  The world environment,growth, re...
In the Industrial Age businesses generally planned and operated on an inside-outbasis.   <br />The external business envir...
         Business IntelligenceExpenditure on data and information,F2010(E)<br />Internally<br />Sourced<br />64.5%<br /> S...
Nearly two thirds of all business data, information and intelligence in Australia in F2010 will be internally generated.Ho...
Internally Generated Information?<br />ICT<br />Marketing & PR<br />S t a f f   &   E m p l o y e e s<br />Distribution<br...
Over one third of all spending on data, information and intelligence by enterprises in F2010 will be outsourced.This propo...
 Type Of Outsourced Business Information       Australia  F2010(F)<br />Exploratory<br />News/	<br />Books/	<br />Mags. 	<...
Purpose Of Outsourced InformationAbout What?F2010 (F)<br />Exploratory<br />Government  	  1.0%<br />World     	  0.8%<br ...
Of all the business spending on data, information and intelligence - $195 billion -  only 10%is spent on  issues in the ex...
The Imperative of Going Up The Information Chain<br />
The Knowledge Pyramid<br />By Value<br />By Volume<br />Vision & Strategy<br />Vision<br />Vision<br />Expert Opinion<br /...
3.The Innovation & Productivity Imperative<br />
Standard of Living  200820Highest NationsGDP/capita, ppp basis<br />$US ‘000 (ppp)<br />           CIA FactBook/IBISWorld ...
Standard of Living  200821-40Highest NationsGDP/capita, ppp basis<br />$US ‘000 (ppp)<br />           CIA FactBook/IBISWor...
Business Research & Development(% of GDP)<br />World Best Practice: nations > 2.5% of GDP<br /> (eg. Sweden, Japan, Finlan...
Productivity Growth (Growth in GDP/ hour worked, % pa)<br />Growth in GDP/hour worked (%)<br />Australia<br />New Zealand ...
4.Keys To Success <br />
What the Best Enterprises Are Doing<br />  1.	They stick to one business at a time and do not diversify<br />  2.	They aim...
Positioning<br />Secure a safe industry position in your chosen industry to be master-of one’s-own-destiny  by dominating ...
Industry Share Strategy(positioning for a winnable war)<br />No-man’s-land (un-winnableposition)<br />         Caught betw...
  Outsourcing And A Virtual Corporation<br />In the Industrial Age, corporations set out to be self-sufficient - apart fro...
Business Outsourcing in the New Age<br />Trucking<br /><ul><li>Road transport industry.</li></ul>Cleaning<br /><ul><li>Off...
Laundry, work clothes.</li></ul>Canteens, Dining Rooms<br /><ul><li>Caterers.</li></ul>Maintenance<br /><ul><li>Painting .
Engineering.
Carpentry.</li></ul>Security<br /><ul><li>Security systems.
Surveillance services.</li></ul>Personnel<br /><ul><li>Recruitment.
Out placement.
Training.</li></ul>Reception<br /><ul><li>Serviced offices.</li></ul>Accounting<br /><ul><li>Payroll, Share Registers
Full contract accounting.
Superannuation administration.</li></ul>Computing<br /><ul><li>Software development.
Computer services (IT outsourcing)</li></ul>Property<br /><ul><li>Property trusts,
Property management</li></ul>Marketing<br /><ul><li>Advertising, media buying
Call Centres</li></ul>Distribution<br /><ul><li>Warehousing & Delivery</li></ul>Information & Planning<br /><ul><li>Databa...
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Transcript of "Keynote intelligence, innovation & best practice"

  1. 1. Intelligence, Innovation & Best Practice<br />How organisations are driving growth and profitability<br />Phil Ruthven, Chairman<br /> WHERE KNOWLEDGE IS POWER<br />
  2. 2. Topics<br />1. A New Age Business<br />2. The Intelligent Organisation<br />Innovation & Productivity<br />Keys To Success<br />Snapshots Of A Changing World<br />
  3. 3. 1. A New Age Business<br />
  4. 4. Expectations of a New Age business<br />Profitability and growth<br />A return on shareholder funds after tax of 4 times the bond rate<br />Growth better than the industry average ( + international?)<br />Uniqueness in:<br />Product, IP and operations<br />Organisational culture<br />World best practice in:<br />Value for money for customers<br />Respect for the society in which it operates<br />Relations with other stakeholders<br />Treatment of the natural environment<br />
  5. 5. Australasian Profitability by Cohorts Return on Shareholder Funds (after tax), Top 1250 businesses 5 years to F2009<br />23% > World Best Practice (ROSF 22.2%)<br />42% > Average (ROSF 12.6%)<br />68% > Bond Rate (5.4%)<br />11% Losses<br />-10.5<br />-128.0<br />Percent<br />Source: IBISWorld 19/11/09<br />
  6. 6. ProfitabilityBy Major Industries Return on Shareholder Funds (after tax), Top 1250 businesses 5 years to F2009<br />0.4<br /> 6.4<br />Percent<br />Source: IBISWorld 22/12/09<br />
  7. 7. Intellectual Property<br />Intellectual property can best be described as a “cocktail” of: <br /><ul><li>skills, special competencies, unique systems;
  8. 8. patents, trademarks & brands;
  9. 9. organisational culture, customer relation protocols;
  10. 10. vision, plans and documented achievable strategies.</li></ul>It is the "holy grail" of a enterprise, its core and its most valuable balance sheet asset, whether recorded as such in dollar terms or not.<br />
  11. 11. Unique Organisational Culture<br />A unique culture is about attracting and keeping <br />good people to your business, and helping develop ordinary people into extraordinary people.<br />This is built on a base of world best practice principles of human resources management. But a unique culture goes well beyond the basics: it needs to have special elements of both a tangible and intangible nature.<br />No matter how often we say it, employees are not a firm’s most valuable asset, since slavery has been outlawed for some considerable time! But in the emerging “sellers market” we need them to stay.<br />
  12. 12. 2.The Intelligent Organisation<br />
  13. 13. The Total Environment For Business <br /> W O R L D<br /> N A T I O N A L R E S O U R C E S <br /> C O M M U N I T Y <br /> E C O N O M Y <br />Marketplace<br />Government<br />Our <br />Purchases<br /> Its Own Industry<br />A N Z S I C C l a s s<br />A <br />Firm<br />(Equity Debt)<br />Finance<br />Labour<br />Services<br />© IBISWorld<br />
  14. 14. How much do weneed to know about . ..<br />The Influential Environments (4)<br /> 1. The world environment,growth, regions, nations, demography etc. ?<br /> 2. National resources,developed (infrastructure, IC&T), natural (resources, ecology)?<br /> 3. Our community,its changing demography, lifestyles and spending ?<br /> 4. The economic environment,the “business weather” conditions?<br />The Operating Environments (6)<br /> 5. The government environment,laws, taxes, policies, incentives?<br /> 6. The finance market,equity, debt, exchange/interest rates, treasury ?<br /> 7. The services market,to outsource none-core activities and functions ?<br /> 8. The labour market,for executives, employees and customers?<br /> 9. The purchases market,raw materials, semi-/finished goods, prices ?<br /> 10. Its market,local and global?<br /> The Immediate Environment Our own industry, WBP, size, growth & disposition, competitors? <br />OurOwn Business<br /> Its IP, financials, sales, operations, TQC, productivity, R&D, HR etc. ?<br />
  15. 15. In the Industrial Age businesses generally planned and operated on an inside-outbasis. <br />The external business environments were <br /> largely opaque to an enterprise which tended to <br /> be fortress style; and enterprises were opaque to <br /> outsiders who saw enterprises as secretive.<br />In the New Age businesses must now forecast, plan and operate on an outside-in basis.<br /> The business environments are becoming transparent to enterprises, and in turn the enterprises <br /> are becoming more transparent to outsiders.<br />
  16. 16. Business IntelligenceExpenditure on data and information,F2010(E)<br />Internally<br />Sourced<br />64.5%<br /> Sales analysis<br />Personnel<br />Operational<br /> analyses etc.<br />35.5%<br />Externally<br />Sourced<br />R&D, <br />Innovation<br /> Finance &<br /> Accounts <br />IBISWorld 17/11/09<br />
  17. 17. Nearly two thirds of all business data, information and intelligence in Australia in F2010 will be internally generated.How much value-adding do we do with this, to help with planning, efficiency, revenue growth, CRM and profitability?<br />
  18. 18. Internally Generated Information?<br />ICT<br />Marketing & PR<br />S t a f f & E m p l o y e e s<br />Distribution<br />R&D QC<br /> Senior Mgt.<br /> CEO <br /> & <br /> Board<br /> Human <br />Resources<br />Finance & <br />Accounts<br />CIO?<br />Operations<br />IC&T<br />© IBISWorld<br />
  19. 19. Over one third of all spending on data, information and intelligence by enterprises in F2010 will be outsourced.This proportion has been steadily increasing from less than 10% half a century ago to an estimated 35.5% this year.We are spending more on information and also outsourcing more of it.<br />
  20. 20. Type Of Outsourced Business Information Australia F2010(F)<br />Exploratory<br />News/ <br />Books/ <br />Mags. <br />1.2%<br />Scientific<br />Research<br />Online Info 2.0%<br />ISPs 1.7%<br />Data Process 1.5%<br />Mkt. Research 1.3%<br />Other1<br />Conferences/<br />Meetings2<br /> 2.2%<br />3.1%<br />5.8%<br />Cons. Eng. + <br />Architects<br />Data/Inform. 6.5%<br />26.2%<br />Associations 6.7%<br />Env. Serv. 7.7%<br />Accounting<br />Services <br />20.3%<br />Mgt. Consulting <br />Legal <br />Services<br />9.7%<br />10.6%<br />Note: 1 Public Relations <br /> Credit Agencies 0.9%<br /> Other 0.7%<br />` 2 Includes accommodation, <br /> travel, registration <br /> fees, speakers etc<br />IBISWorld 18/11/09<br />
  21. 21. Purpose Of Outsourced InformationAbout What?F2010 (F)<br />Exploratory<br />Government 1.0%<br />World 0.8%<br />Services 0.5%<br />Resources 0.5%<br /> Community1.5%<br />Labour 2.0%<br />Economy2.5%<br /> Purchases 2.9%<br /> Finance 3.0%<br />Market4.0%<br />Own Industry 9.8%<br />71.6%AboutOur<br /> Own Company1<br /> From Accounting firms, Legal firms, <br /> Management Consultants, <br />Consulting Engineers etc <br />Spending on information about <br />the external environment ($19.5<br />billion) is 28% of all outsourced <br />spending and 10% of all spending <br />IBISWorld 17/11/09<br />
  22. 22. Of all the business spending on data, information and intelligence - $195 billion - only 10%is spent on issues in the external environment. But this spending is growing nearly 2% pa faster than the economy in response to the need to plan on an outside-in basis, displacing the old inside-out approach of the secretive Industrial Age?<br />
  23. 23. The Imperative of Going Up The Information Chain<br />
  24. 24. The Knowledge Pyramid<br />By Value<br />By Volume<br />Vision & Strategy<br />Vision<br />Vision<br />Expert Opinion<br />Unique IP<br />Unique<br /> IP<br /> Decreasing <br />Value<br />Wisdom<br /> Wisdom<br />Expert Opinion<br /> Expert Opinion<br />Intelligence<br />Intelligence<br /> Increasing <br />Value<br />Information<br /> Information<br />Data<br />Data<br /> Hearsay<br />But interesting!<br /> Hearsay, Rumour, Scuttlebut<br />Source: IBISWorld 18/11/09<br />
  25. 25. 3.The Innovation & Productivity Imperative<br />
  26. 26. Standard of Living 200820Highest NationsGDP/capita, ppp basis<br />$US ‘000 (ppp)<br /> CIA FactBook/IBISWorld 20/10/09<br />
  27. 27. Standard of Living 200821-40Highest NationsGDP/capita, ppp basis<br />$US ‘000 (ppp)<br /> CIA FactBook/IBISWorld 20/10/09<br />
  28. 28. Business Research & Development(% of GDP)<br />World Best Practice: nations > 2.5% of GDP<br /> (eg. Sweden, Japan, Finland, S. Korea, USA)<br />Australia 14th in 2008 among 30 OECD member.<br />OECD<br />BERD % of GDP<br />Australia<br />NZ (0.5%)<br /> Year, ended June<br />Source: DIISR<br />
  29. 29. Productivity Growth (Growth in GDP/ hour worked, % pa)<br />Growth in GDP/hour worked (%)<br />Australia<br />New Zealand <br /> Year, ended June (Australia), March (NZ)<br />Source: DIISR<br />
  30. 30. 4.Keys To Success <br />
  31. 31. What the Best Enterprises Are Doing<br /> 1. They stick to one business at a time and do not diversify<br /> 2. They aim to dominate some segment (s) of their market<br /> 3. They are forever innovative,valuing the business’ IP.<br /> 4. They outsourcenon-core activities to enable growth.<br /> 5. They don’t own “hard” assets.<br /> 6. They havegood and professional financial management.<br />7. They plan from the outside-in not the inside-out<br /> 8. They anticipate any new industry lifecycle changes.<br /> 9. They follow world best practice for their own type of business.<br />10. They developstrategic alliances.<br />11. They develop unique organisational cultures.<br />12. They valueleadership first and management second.<br />
  32. 32. Positioning<br />Secure a safe industry position in your chosen industry to be master-of one’s-own-destiny by dominating something. <br />Domination can be of:<br />the whole industry class (being a major); or<br />one category in the industry (a niche player); or<br />one product group1 (an ultra-niche player); or <br />one product ( a boutique operator).<br />Note: 1 Or a customer segment; and occasionally a geographic area<br />
  33. 33. Industry Share Strategy(positioning for a winnable war)<br />No-man’s-land (un-winnableposition)<br /> Caught between nichers (“knee-cappers”)<br /> and ultra-niche players (“ankle-biters”)<br /> Ultra-niche specialist (1%)<br /> Niche Player <br />Exotic/boutique operator (0.1%)<br />1-5<br /> %<br /> 5%<br /> No-man’s-land <br />Major Player<br />25-75%<br /> 5-25%<br />No-man’s-land (un-winnableposition) <br /> Caught between majors (“sledgehammers”)<br /> and niche players (“knee-cappers”) <br />Source: IBISWorld<br />
  34. 34. Outsourcing And A Virtual Corporation<br />In the Industrial Age, corporations set out to be self-sufficient - apart from obvious sub-contracting - creating complex and multi-layered/multi-functional structures.<br />In the New Age, all non-core/non-strategic activities areoutsourced1 to specialists in the interest of reduced complexity and to develop focus, lightness, flexibility and faster growth of the business: a virtual corporation. In 2005, over $450 billion of non-core activities are now outsourced by businesses (20% of revenue)<br />1 Outsourcing is not to be confused with subcontracting<br />
  35. 35. Business Outsourcing in the New Age<br />Trucking<br /><ul><li>Road transport industry.</li></ul>Cleaning<br /><ul><li>Office, factory, hotel etc.
  36. 36. Laundry, work clothes.</li></ul>Canteens, Dining Rooms<br /><ul><li>Caterers.</li></ul>Maintenance<br /><ul><li>Painting .
  37. 37. Engineering.
  38. 38. Carpentry.</li></ul>Security<br /><ul><li>Security systems.
  39. 39. Surveillance services.</li></ul>Personnel<br /><ul><li>Recruitment.
  40. 40. Out placement.
  41. 41. Training.</li></ul>Reception<br /><ul><li>Serviced offices.</li></ul>Accounting<br /><ul><li>Payroll, Share Registers
  42. 42. Full contract accounting.
  43. 43. Superannuation administration.</li></ul>Computing<br /><ul><li>Software development.
  44. 44. Computer services (IT outsourcing)</li></ul>Property<br /><ul><li>Property trusts,
  45. 45. Property management</li></ul>Marketing<br /><ul><li>Advertising, media buying
  46. 46. Call Centres</li></ul>Distribution<br /><ul><li>Warehousing & Delivery</li></ul>Information & Planning<br /><ul><li>Database services Strategic and Other Consulting</li></ul>Franchising<br /><ul><li>Operations.</li></li></ul><li>The New Age VirtualCorporation<br />Traditional Structure<br />New Structure<br />Virtual Corporation<br />Multi-layered Corporation<br />Leader, Senate and<br />Top Management<br /> Board, CEO and<br /> Top Management<br />Head Office functions<br />Mostly <br />outsourced<br />Implementers<br />Middle<br />Management<br />No Longer <br />Mostly outsourced<br />Required<br />Coordinators<br />& Operatives<br />Supervisors<br />& Employees<br />No Longer<br />Required<br />Mostly outsourced<br /> and /or franchised<br />Functions provided back to company by firms in new (specialised) industries (e.g <br />IT, personnel, legal, accounting, information, transport, cleaning etc.)<br />
  47. 47. Leadership<br />Leadership sits above management. It demands special attributes such as loneliness in ultimate decision making (after full consultation), often with no voting. And, sometimes, no consensus. <br />It is non-gender specific.<br />Leadership involves more external focus than internal: the opposite of management.<br />Apart from listening to experts and confidantes, it involves communicating directly with major customers at least once a year.<br />
  48. 48. What can happen with great leadership, and following the Keys To Success (or most of them) The Leighton Group was mid-sized not that long ago<br />
  49. 49. Leighton Holdings Revenue & Profitability1Revenue excludes JV & associates share 1962 to F2009<br />Notes: 1Net profit after tax on S/F<br />2 Zero data are actually losses for those 3 years<br />ROSF<br />Revenue(A$ billion)<br />ROSF % <br />Trend<br />Trend<br />Revenue<br />IBISWorld 30/03/10<br />
  50. 50. Successful Mid-sized Businesses5-year average ROSF (after tax) basis, % to F2009<br />Freightways 31.9%<br />Hollenstein 29.9%<br />Tower 29.3%<br />Renaissance Corp 28.3%<br />Fisher & Paykel 27.2%<br />Skycity 27.1%<br />Mainfreight 25.1%<br />Telecom NZ 24.5%<br />NZ Refining Co 23.3%<br />Steel & Tube Hold. 20.8%<br />Cavalier Corp 20.6%<br />
  51. 51. 5.Snapshots Of A Changing World<br />
  52. 52. World GDP GrowthReal growth (PPP), 1950-2011(F)<br />Purchasing Power Parity (PPP) terms<br />2008 3.2% <br />2009 -2.5% <br /> 2.5% (F)<br /> 2.9% (F)<br /> Past 25 years 3.5% p.a<br />1950-1969 growth<br />in US$ market terms<br /> IMF/Economist//IBISWorld: 30/03/10<br />
  53. 53. World’s 30 Largest Economies2010 (F)<br />Poland 1.0%<br />S. Arabia 0.8%<br />Argentina 0.8%<br />Thailand 0.8%<br />S. Africa 0.7%<br />Egypt 0.6%<br />Pakistan 0.6%<br />Colombia 0.6%<br />Malaysia 0.6%<br />Belgium 0.5%<br />Purchasing Power Parity (PPP) terms<br />Rest of World<br />(198 nations)<br /> 15.5%<br /> 21st – 30th Nations 7.2%<br />20.5% USA<br /> 11th – 20th Nations 14.8%<br />13.3% China<br />Italy <br />Brazil <br />Japan<br />Russia <br />France <br />Britain<br />Germany<br />India<br />2.5%<br />2.9%<br /> 3.0%<br />6.0%<br />3.1%<br />5.3%<br />3.1%<br />4.0%<br />Mexico 2.1%<br />Spain 1.9%<br />Korea S 1.9%<br />Canada 1.9%<br />Indonesia 1.4%<br />Turkey 1.3%<br />Australia 1.2% 17th<br />Iran 1.2%<br />Taiwan 1.0%<br />Netherlands 0.9%<br />World’s 228 nations <br /> US$ 72.1 trillion<br />CIA/IBISWorld 08/02/10<br />
  54. 54. Economic Growth: 2009 (F)20 Largest Economies (ppp ranking)<br />World Growth<br />2008, -2.5%<br />The Economist/IBISWorld11/04/10<br />
  55. 55. Economic Growth: 2010(F)20 Largest Economies (ppp ranking)<br />World Growth<br />2010 (f), 2.5%<br />The Economist/IBISWorld11/04/10<br />
  56. 56. Economic Growth:ChinaReal growth1950-2011 (F)<br />8.2% average<br />SSBC/IBISWorld: 24/03/10<br />
  57. 57. Economic Growth: New ZealandAnnual real GDP growth (%) progressed in quarters to March 2010<br />Long Business Cycle, <br />average 8 years<br />Source: IBISWorld/NZ Stats. 08/04/10<br />
  58. 58. New Zealand’s Industry MixShares of GDP in real terms Year to June2008<br />Person. Serv.<br />1.1%<br /> Cult & Rec.Serv.<br /> Mining<br />1.2%<br />Hospitality <br />(1.6%)<br /> Agriculture<br /> 5.8%<br /> 2.0%<br />Utilities 1.7% <br />Other<br /> 3.4%<br /> Health 5.0-%<br />Educn. 3.8%<br />14.1%Manufacturing<br />Govt. Adm. 4.6%<br />4.6%Construction<br /> O’Ship Dwells. 5.8%<br />7.8% W’Saling <br /> 14.1%<br /> Prop. & Bus. <br /> Services<br />6.1%Retailing<br /> 6.8%<br />4.8%Transpt.<br />Finance <br />& Ins.<br />6.1%<br />Communicns. <br />GDP $NZ 179.2 billion (current prices)<br />ABS 5206-26 /IBISWorld 06/11/08<br />
  59. 59. To download this presentation go to: www.ibisworld.com.au<br />Enter details here to download presentation<br />r u t h v e n<br />i b m <br />
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